RUCCI
JF-Expert Member
- Oct 6, 2011
- 1,701
- 1,714
Kigoma MP Zitto Kabwe has raised the red flag again over the StaOil/Exxon Mobil deal, claiming that it will cost the country a staggering loss of $55 billion (Sh92 trillion) should it go through.
And this loss, massive as it is, is just gross value calculated without considering factors such as inflation in the 15 years of the licence period, says the outspoken MP.
To put things into perspective, if the current inflation rate is factored in, the net loss Tanzania would incur in the next 15 years works out to $12 billion (Sh20 trillion going by current exchange rates).
Moreover, this loss is gross value calculated without considering other factors such as inflation during the licence period.
The duration of the contract for Block B is estimated at 15 years-meaning the country would be losing an estimated $3.6billion (Sh6.1trillion) every year.
Mr Kabwe's claims, documented in a 15-page document, comes as another UK-based gas firm, British Gas (BG), announced yesterday that it has produced higher-than-expected flows of gas from a test well off the coast of Tanzania-boosting the financial viability of its planned liquefied natural gas (LNG) export terminal.
Test flows at BG's Mzia-3 well off the southern part of Tanzania's coast produced better-than-expected results, according to Reuters, reaching a maximum rate of 101 million cubic feet per day-nearly double the flow rate at Mzia-2 last year.
"The excellent results from this latest drill-stem test further reduce reservoir risk, a critical factor as we progress design of the upstream production facilities and infrastructure," said Sami Iskander, BG Group's chief operating officer.
BG shares were up 0.2 percent at 0720 GMT. Jointly with partners Statoil, Exxon Mobil and Ophir Energy, plans to build a two-train LNG export terminal, expected to start operating in the early 2020s. A final investment decision is set for 2016.
Tanzania and Mozambique are in a race with Russia, Australia, the United States and Canada to build LNG export plants with the aim of exploiting a gap in global supply that is expected to open up by 2020.
BG Group has a 60 per cent interest in the three blocks offshore Tanzania that are expected to produce gas to feed the terminal, while Ophir Energy and Pavillon Energy hold 20 per cent each.
In another development, StaOil and Exxon Mobil reportedly face serious allegations in the wake of an analysis conducted by the opposition MP after an addendum was leaked in July. Block 2, owned by StaOil and Exxon Mobil, reportedly has natural gas reserves of about 21 trillion cubic feet (TCF) currently valued at $231billion.
"StaOil/ExxonMobil PSA Tanzania will therefore lose US$55 billion over the life span of the block, which is estimated to be 15 years," Mr Kabwe says. "This loss of revenue is equivalent to more than 200 percent of the country's current GDP, which is estimated at US$25 billion as of December 2013."
According to the MP, a total production of 1,500 Million Standard Cubic Feet (MMscf) per day is equivalent to 258,000 barrels of oil per day-whereby 1 MMscf is equal to 172 barrels of oil).
Using a Model PSA and a price of US$ 100 per barrel (average price over the past 12 months), Tanzania would receive US$7.6 million daily from Block 2 had it followed the original agreement PSA model that was recommended.
Given the terms in the leaked StaOil/ExxonMobil PSA, which are contrary to what was earlier agreed, Tanzania will receive only US$5.5 million a day, leading to a loss of US$2.1 million everyday-or $768.6million, which for 15 years would result in the loss of $11.5billion in revenue.
According to Mr Kabwe, the recommended PSA model that was rejected would have yielded a profit of $28billion in the 15-year period. The adopted model, he says, will yield a net profit of $16billion in the same period-meaning a loss of a whopping $12billion.
Although The Citizen could not independently verify the $1 billion loss claim, the silence of the investors has ordinary Tanzanians worried, considering that their hopes were raised following the discovery of natural gas reserves currently valued at $600 billion.
But the government, through the Tanzania Petroleum Development Corporation, has strongly defended the agreement, dismissing criticism from some local and international analysts.
Neither StaOil nor Exxon Mobil has responded to the leaked information despite attempts by The Citizen to get their side of the story.
Source:The citizen
$55bn: What StaOil deal will cost the taxpayers - National - thecitizen.co.tz
And this loss, massive as it is, is just gross value calculated without considering factors such as inflation in the 15 years of the licence period, says the outspoken MP.
To put things into perspective, if the current inflation rate is factored in, the net loss Tanzania would incur in the next 15 years works out to $12 billion (Sh20 trillion going by current exchange rates).
Moreover, this loss is gross value calculated without considering other factors such as inflation during the licence period.
The duration of the contract for Block B is estimated at 15 years-meaning the country would be losing an estimated $3.6billion (Sh6.1trillion) every year.
Mr Kabwe's claims, documented in a 15-page document, comes as another UK-based gas firm, British Gas (BG), announced yesterday that it has produced higher-than-expected flows of gas from a test well off the coast of Tanzania-boosting the financial viability of its planned liquefied natural gas (LNG) export terminal.
Test flows at BG's Mzia-3 well off the southern part of Tanzania's coast produced better-than-expected results, according to Reuters, reaching a maximum rate of 101 million cubic feet per day-nearly double the flow rate at Mzia-2 last year.
"The excellent results from this latest drill-stem test further reduce reservoir risk, a critical factor as we progress design of the upstream production facilities and infrastructure," said Sami Iskander, BG Group's chief operating officer.
BG shares were up 0.2 percent at 0720 GMT. Jointly with partners Statoil, Exxon Mobil and Ophir Energy, plans to build a two-train LNG export terminal, expected to start operating in the early 2020s. A final investment decision is set for 2016.
Tanzania and Mozambique are in a race with Russia, Australia, the United States and Canada to build LNG export plants with the aim of exploiting a gap in global supply that is expected to open up by 2020.
BG Group has a 60 per cent interest in the three blocks offshore Tanzania that are expected to produce gas to feed the terminal, while Ophir Energy and Pavillon Energy hold 20 per cent each.
In another development, StaOil and Exxon Mobil reportedly face serious allegations in the wake of an analysis conducted by the opposition MP after an addendum was leaked in July. Block 2, owned by StaOil and Exxon Mobil, reportedly has natural gas reserves of about 21 trillion cubic feet (TCF) currently valued at $231billion.
"StaOil/ExxonMobil PSA Tanzania will therefore lose US$55 billion over the life span of the block, which is estimated to be 15 years," Mr Kabwe says. "This loss of revenue is equivalent to more than 200 percent of the country's current GDP, which is estimated at US$25 billion as of December 2013."
According to the MP, a total production of 1,500 Million Standard Cubic Feet (MMscf) per day is equivalent to 258,000 barrels of oil per day-whereby 1 MMscf is equal to 172 barrels of oil).
Using a Model PSA and a price of US$ 100 per barrel (average price over the past 12 months), Tanzania would receive US$7.6 million daily from Block 2 had it followed the original agreement PSA model that was recommended.
Given the terms in the leaked StaOil/ExxonMobil PSA, which are contrary to what was earlier agreed, Tanzania will receive only US$5.5 million a day, leading to a loss of US$2.1 million everyday-or $768.6million, which for 15 years would result in the loss of $11.5billion in revenue.
According to Mr Kabwe, the recommended PSA model that was rejected would have yielded a profit of $28billion in the 15-year period. The adopted model, he says, will yield a net profit of $16billion in the same period-meaning a loss of a whopping $12billion.
Although The Citizen could not independently verify the $1 billion loss claim, the silence of the investors has ordinary Tanzanians worried, considering that their hopes were raised following the discovery of natural gas reserves currently valued at $600 billion.
But the government, through the Tanzania Petroleum Development Corporation, has strongly defended the agreement, dismissing criticism from some local and international analysts.
Neither StaOil nor Exxon Mobil has responded to the leaked information despite attempts by The Citizen to get their side of the story.
Source:The citizen
$55bn: What StaOil deal will cost the taxpayers - National - thecitizen.co.tz
